Dan Price accepts the Young Entrepreneur of the Year Award at the GeekWire Awards in 2013.
Dan Price accepts the Young Entrepreneur of the Year Award at the GeekWire Awards in 2013.

Gravity Payments CEO Dan Price made big headlines when he announced plans to implement a minimum annual salary of $70,000 at the Seattle-based company, reducing his salary to $70,000, from $1 million previously.

But he also made it clear that he hopes he won’t be alone.

RELATED: Dan Price was shaped by a tough early lesson that made him more financially conservative

“I think that this is going to be the model” for other companies, said Price during an interview with KIRO Radio’s Dori Monson. “I think that there’s going to be a lot of eyeballs on us, over the next couple years. … I think when the whole world sees what we’re about to do, public companies will follow suit.”

Will other companies really do the same thing? GeekWire followed up with other Seattle-area startup leaders and investors to find out. We heard widespread respect for what Price has done. But in establishing a $70,000 base salary, Dan Price doesn’t appear to have started a movement, at least not yet.

We asked what these tech leaders thought about Price’s decision, and whether they would do the same thing. We also asked for their opinions of his previous $1 million salary. (Price said his pay will eventually go back up, to ensure that the company can sustain a CEO’s salary at market rate.)

Here are highlights from some of the responses we received.

Andy Liu, angel investor and BuddyTV CEO 

What do you think of Gravity Payments CEO Dan Price’s decision to boost salaries of all employees to a minimum of $70,000?

BuddyTV's Andy Liu.
BuddyTV’s Andy Liu.

“Dan Price built a tremendous business where he took the majority of the risk without having to raise capital from outsiders (family excluded). It’s a fantastic accomplishment and should be celebrated because it is a very difficult thing to do and he is absolutely deserving of the accolades he’s received.

Given that he only has to answer to his employees and customers, I think the decision to boost salaries was/is a wise one. He stood out with his decision and garnered significant attention for himself and the company which I believe will drive only more business. His employees will be more loyal and he’ll attract even higher caliber employees. The company’s enterprise value would also likely increase if he were to sell the company. Overall, I thought it was a great thing.

That being said, I don’t believe it is the right decision for all companies to take. Many startups are in ‘investment mode,’ meaning that they are not profitable but working hard to get to sustainability or the next round of financing. Cash is the number one killer of startups. Dan’s built a nicely profitable business and I’m not sure if he started with the $70,000 minimum if he would have achieved what he’s achieved thus far. A startup should focus on extending the runway for as long as possible to find a scalable model that works. High salaries may reduce the chances of success and may also make it more difficult to raise money in the future. At the same time, startups should aspire to building a great enterprise where the rewards far exceed $70,000 per employee per year. However, that may mean that everyone — including the CEO — needs to makes sacrifices to make that happen during the earlier stages of a company’s lifecycle.”

What do you think about Price previously taking a salary of $1 million on profits of $2.2 million in the company? Was that justified?

“On the salary question — it’s simple, he owns the company and can set his own salary. His company was in harvest mode with over $2 million in profits. He was reaping the rewards of building and investing in his company for over a decade. He’s entitled to earn whatever portion of the profits he wants — this is one of the reasons people aspire to become an entrepreneur. With his recent decision, he’s back in investment mode again by reducing his salary and investing in his people. I think the more interesting question might be whether in the long-term Gravity will become much stronger and profitable, or will Gravity become less competitive due to its higher wage structure? Only time will tell, but based on Dan’s track record, I would continue to bet on him.”

Sarah Bird, Moz CEO

Moz CEO Sarah Bird
Moz CEO Sarah Bird

What do you think of Gravity Payments CEO Dan Price’s decision to boost salaries of all employees to a minimum of $70,000?

“Price’s bold move is an inspiration and challenge to all of us. What more could each of us be doing to share the prosperity generated in our region? Dan pushed the envelope by creating a policy that provides financial security for everyone at Gravity Payments.

Sadly, many in our region don’t have paid leave at the birth of a child or other medical event. Further, the gap between the poor and the wealthy is widening.

Dan Price, on the other hand, understands that if you take care of the people, they will take care of the business. Most importantly, he did something about it, instead of just talking about it. I’m proud that he’s from our region and challenging all of us to be more generous.”

Bryan Mistele, CEO and co-founder of INRIX

What do you think of Gravity Payments CEO Dan Price’s decision to boost salaries of all employees to a minimum of $70,000?

Inrix CEO Bryan Mistele
Inrix CEO Bryan Mistele

“While I’m not familiar with Gravity Payments specifically (I’m just not familiar with their business), this sounds like a move by a company having a hard time recruiting and retaining talent. At INRIX, our U.S. employees have an average base salary of $130,000, which does not count the value of bonuses, stock options or benefits. Because Seattle is a competitive market for talent, we already pay our employees on average almost double the $70,000 level to make sure we are hiring and retaining the best people. This is how we successfully hired 60 employees last year on a base of about 300, and how this year we’ll hire at least 50 more. Of our total U.S. employee base, only 6 percent make less than $70,000. Of this 6 percent, almost all of these employees are recent college hires, customer service reps or part-time employees — people just starting out or who are seeking flexible hourly arrangements.”

Would you consider boosting the minimum pay of your staffers to $70,000?

“I don’t think INRIX needs to boost the minimum pay of all employees to $70,000 because I feel it would only hurt the very people it is purported to help – in our case, the 6 percent. In the United States today, the unemployment rate for people in their 20’s with four-year or advanced degrees is more than double the national average — at 12 percent in 2014 versus 5.5 percent nationally. By raising the minimum wage (either as a city as Seattle has done or as a company like Gravity has done), it will only make the unemployment rate for new college graduates worse as these people get priced out of the market. Either that, or it will make the city as a whole or the particular company less competitive relative to others.

By raising the minimum wage at INRIX to $70,000, it would mean we just wouldn’t hire the part-time programmer we have on our mobile team who works a couple of hours after school as he works his way through college. We wouldn’t hire the part-time parent who is in a job-sharing arrangement with another part-time parent at INRIX. We wouldn’t hire customer service representatives — rather we would outsource this function to a third-party who could do it cheaper as many other companies have already done. Likewise, at $70,000, we would look for more experienced personnel versus taking a risk on a new college hire who’s never worked a full-time job before.

My first job (after paper boy) was at an electrical engineering company in Detroit where I earned minimum wage. I had no experience. I was very thankful for that job because it gave me an opportunity to learn, which then helped me identify what I wanted to do with my life, and grow into better jobs as I gained experience. I know for a fact that company in Detroit never would have hired me had the minimum wage been much higher — I just wasn’t worth it. By setting the starting salary to a high arbitrary number, it just prices a variety of people out of the market who are — by definition — just starting out.

My point is a minimum wage is a starting place. What we’ve found is folks who join INRIX below the $70,000 level don’t stay there for long. These people learn new skills, move into new roles, and see their salaries grow accordingly. Without the opportunities to start out at lower-level roles right out of college or part-time roles that give them flexibility to juggle a family or school, these folks just wouldn’t have these opportunities. In a competitive market like Seattle, the market itself does a very good job matching supply and demand. If a company isn’t making competitive offers, then it won’t attract the best people and won’t be around very long.”

What do you think about Price previously taking a salary of $1 million on profits of $2.2 million in the company? Was that justified?

COMMENTARY BY DAN PRICE: 3 important tips for young entrepreneurs

“I can’t speak on how other CEO’s manage their companies, but it’s important to point out that entrepreneurs are different than salaried employees. When I left Microsoft to start INRIX, I went for a year with no salary. Additionally, I invested a lot of my own money into the business not knowing if it would ever take off. Later, when INRIX was stronger, I took a salary for years and years below what I could have been making at Microsoft.

Why would an entrepreneur ever do this? Besides the passion to create and build new things, the answer is because they hope at some point either their stock will be worth more than enough to make up for it, or for companies like Gravity that are wholly-owned or are likely to remain private for whatever reason, the entrepreneur can take some money out of the business through profits and dividends. Without the hope of recouping years of lost opportunity working at somewhere big like Microsoft or Google, why would an entrepreneur ever take a risk? Without entrepreneurs ever taking risks, then how will the U.S. ever build the next Google, Microsoft, Amazon or Facebook? Risk and return are very related. Take away the return, and you’ll take away the risk entrepreneurs are willing to take that result in new businesses being built.”

Nick Hanauer, investor, entrepreneur and advocate for a higher minimum wage.

hanauer12
Nick Hanauer.

“Dan is an awesome guy and is doing a very cool and innovative thing. Obviously it is both morally righteous and it appears to be working for him economically: ‘Gravity has received more than 3,500 applications for two current job openings. That’s up from 300 to 400 applicants it usually gets for a position.’

It’s almost like if you invest in your employees, you’ll attract better talent.

I am not sure if Dan gives his employees equity too, but that is more the course we take. At Front Desk for instance, which is a comparable company in some ways, we pay decently, $40,000 minimum, usually plus incentives, plus stock. So I would like to believe that in the success scenario, Front Desk line employees will make out big time.”

What do you think about Price previously taking a salary of $1 million on profits of $2.2 million in the company? Was that justified?

“As for taking a big salary, as far as I know, it is a private company entirely owned by him. So It is his profit. Why not take it in salary. That said, we have created a corporate culture that justifies these crazy differentials between workers and owners that really makes no sense either morally or economically. Shareholder capitalism and all that. Dan’s former salary simply reflected that ethic, something he did not create. But clearly he is pushing back on that ethic which is a really cool thing.

Economies are shaped by values and culture. It did not used to be OK to pay yourself 300 or 1,000 times what your workers make but the CEOs of today’s public companies feel totally justified in that. They are not one whit better at their jobs than they used to be. The only difference is a culture that tolerates this behavior.”

Jeremy Irish, president and co-founder, Geocaching

Jeremy Irish, co-founder and president of Geocaching.
Jeremy Irish, co-founder and president of Geocaching.

What do you think of Gravity Payments CEO Dan Price’s decision to boost salaries of all employees to a minimum of $70,000?

“I think it’s great to care about your employees and desire that everyone in your business is paid well. It’s also one of the great things about running your own company — the ability to make bold decisions like this.”

Would you consider boosting the minimum pay of your staffers to $70,000?

“​Compensation is largely market driven. We evaluate the salary range for job titles and offer competitive salaries at the top end of the market range, based on skills and experience. We then offer profit-sharing based on the success of the company. Aside from this, we truly have a work/life balance which helps us differentiate us from other companies that create an environment with long work hours.

By having a base salary, sharing the success of the company and providing our employees with a true work/life balance we think it is a fair and equitable way of running a business.”

Readers: What do you think? Should other corporate leaders follow Dan Price’s lead? Post your own opinions and experiences in the comments below.

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